A major Quebec engineering firm is poised to be blacklisted from receiving public contracts in the province for five years because of its implication in corruption scandals.
Dessau Inc. could become the highest-profile company to suffer the consequences of the new Parti Québécois government's Bill 1 — which requires companies to get a certificate to be eligible for public contracts.
The provincial securities regulator, the AMF, is responsible for managing the process and says it will not grant a certificate to Dessau following advice from the province's anti-corruption police squad, UPAC.
"The results of the checks led UPAC to make a negative recommendation and the AMF examined the file and maintained that recommendation," said Sylvain Theberge, a spokesman for the regulator.
The process is not entirely finished: under the law, the provincial government has 60 days to overrule the decision. Treasury Board President Stephane Bedard is expected to comment on the AMF decision Friday.
Barring a government intervention, Dessau and an affiliated company, Verreault construction, would not be eligible for public contracts until June 19, 2018.
Dessau's outgoing president recently called the AMF certificate "crucial" to the company.
The announcement could prove extremely damaging as the Montreal-based company of 5,000 employees counts public works as a major chunk of its business.
Dessau had recently made drastic moves to avoid such an AMF reprimand.
Last week it announced the resignation of Jean-Pierre Sauriol as chief executive officer and president of the family-founded business.
In a departure letter to employees, Jean-Pierre Sauriol said it had become clear that if he stayed on board, the company might no longer be eligible to win public contracts.
On Thursday, the company annouced that it would have to insitute short-term layoffs after the AMF added it to the registry of non-eligible firms for public contracts.
In a statement, Dessau said it intends to present a new request for certification as soon as possible.
"Although the AMF acknowledges that Dessau has implemented several actions up until now to reestablish its integrity, these are considered recent. We nonetheless intend to pursue our efforts to meet the AMF's integrity criteria," the statement reads.
Corruption commission testimony
Jean-Pierre Sauriol's brother and fellow company executive, Rosaire Sauriol, testified at Quebec's corruption inquiry about his participation in collusion and illegal political financing schemes earlier this year.
Rosaire Sauriol told the Charbonneau Commission that his company donated $2-million through false-billing schemes alone, at the municipal and provincial level, between 2005 and 2010.
He resigned his post with the company not long after his testimony concluded.
The AMF process applies to public contracts in Quebec larger than $40 million — although the AMF has said the threshold will be lowered further, to $10 million.
Sauriol's departure is only the latest in a series of changes in the industry, which has been rocked by corruption scandals.
Canada's largest engineering firm, SNC-Lavalin Group Inc., has also lost its former president, Pierre Duhaime, who now faces several criminal charges. An executive who testified at the Charbonneau inquiry has also left the business.